21 ATTACHMENT 13 - Laserfiche WebLink

CQNFTDE\'I'IAi.. & PRTVTLT~tsE~i) Regency Centers -Pleasanton ~Y~'ORTi i~ROI)LiCT Fiscal Analysis Memo October 8, 2007 Page 3 of 17 DISCUSSION OF FINDINGS Finding #1: Fiscal Revenues from Project Kosmont projects $678,000 in annual net sales tax revenues from the Project (see Appendix B) while the City's Analysis projects $370,000 in net sales tax. The City projects $330/SF for home improvement sales, $120/SF drug store sales, $135/SF for coffee/food and $1.15/SF for "Other Retail Stores" sales. Based on Kosmont's industry knowledge plus review with peers and past experience, Kosmont believes the sales estimate for home improvement is realistic; however the remaining three are understated. In suburban locations with equivalent demographics and income levels, it is more likely that the range of sales will be higher per square foot: $600/SF for drug stores, $425/SF for coffee/food and $400/SF for other retail including service retail and sit-down restaurants. The City Analysis discounts the Project's annual gross taxable sales by $106,000 (20%) to account for the impact of anticipated overlapping sales with the existing Johnson Drive location. The 20% same-store sales overlap assumption may be reasonable if considered independent of the sales tax leakage circumstance that exists. Specifically, Kosmont estimates close to $63.25 million in annual building/hardware sales leakage from Pleasanton ($632,500 in annual sales tax revenue), some of which will be recaptured by the installation of the proposed Home Depot facility. Accordingly, any potential overlap in sales causing a loss in tax revenue will likely be compensated for by the new store's recapture of leakage. In addition to the overlapping sales discount, the City Analysis discounts the Project's gross annual taxable sales by $53,000 (10%) to account for the impact of the Home Depot on smaller businesses in the area. With Pleasanton leaking approximately $63.25 million in hardware and building material sales, Kosmont estimates the effect will be very small if any and this 10% will be compensated by the new store's recapture of leakage, as with overlapping sales. In fact, a report by Pacific Retail Consulting in September, 2007 estimates that upon the installation of alarge-format home improvement retailer, sales sometimes may actually increase for smaller retailers because of the area's overall increase in home improvement related sales. In other words, a productive congregation of choices within a broad product range can increase activity overall. With respect to property tax, The City's analysis concluded that those taxes generated from the Project would be based on an assessed valuation of $38.1 million thereby generating $100,000 in annual property taxes. However, Regency based on updated development cost estimates is now projecting build out project value to reach $48.1 million. This expected higher Project improvement value, will result in Pleasanton receiving annual property tax closer to $125,100 (See Appendix C). Thu anNyiic us!ot ieuwstive pYryofst arvJ is not a quarontee d sdual utl~or Mtne nnutts. Arojeq pro hxma anA d: s~Wys~6 aro v Dory, AauN owns mry airta n~eunetry Nom v+oae aapessaE .+ mu arwyrs, kOSmon ,asa~v~~are awa state s+~ enano castornis sieaa wt e~e.se~.a+u lax H/8.885.6588 www.koemont.com